The essence and functions of the financial capital market. Capital market and its brief characteristics Supply of real capital

Introduction

Section 1. Theories of capital. Capital market and its structure

1 Capital, its concept and theories

2 Concept, features, structure of the capital market

Section 2. Features of the functioning of the capital market in Russia

1 Evolution of the capital market in Russia. Development of the capital market in Russia in modern conditions

2 State and prospects of the capital market in Russia

Conclusion

List of sources used

Introduction

Capital is property used to generate profit.

According to the classical understanding, this is, as a rule, physical (production, real) capital. It includes means of production that are used to produce goods and services (buildings, structures, equipment, machines). In order for a product to be considered capital, it must have the following characteristics:

· the possibility of using it in the production of other goods (which makes it a factor of production);

· this product must be the result of processing (unprocessed natural resources, for example, minerals, should be classified as land);

· such a product is not used entirely in the production process (which significantly distinguishes this product from raw materials and semi-finished products).

During the development of the economic system, money capital is allocated as an independent capital. It should be noted, however, that money capital appears as a result of the fact that in the process of circulation of industrial capital a time lag occurs in acts of purchase and sale, as well as in the sale and acquisition of means of production. As a result, temporarily free funds begin to appear, which industrial capital transfers to entrepreneurs who are able to professionally and more effectively manipulate money.

Such circumstances lead to the emergence of a layer of loan (money) capitalists.

Transactions with loan capital differ from commodity-money transactions in that the latter are associated with the purchase of means of production, hiring of labor, as well as with the sale of manufactured products. Money capital thus inevitably takes the form of a loan, when money itself becomes a specific object of purchase and sale.

The emergence of loan capital created the need for institutional consolidation of emerging changes.

The level of development of national capital markets is determined by a number of factors. Among these factors, the main ones would be:

Ø the level of economic development of the country;

Ø established traditions of functioning of the stock and credit markets in the country;

Ø the level of production accumulation in the economic system;

Ø household savings.

Undoubtedly, the most significant among the above can be considered the level of economic development of the country.

Thus, the completely obvious conclusion follows that this criterion is best met by the three world economic centers:

ØUSA;

ØEurope;

ØJapan.

There are colossal in scale, highly developed capital markets here. However, here too, it is worth noting that there are some differences and characteristic features.

The paper examines the essence and evolution of the capital market, its functions and structure. Some problems of the functioning of the capital market in Russia and possible ways to solve them are also noted.

Section 1. Theories of capital. Capital market and its structure

1.1 Capital, its concept and theories

Traditionally, capital is divided into fixed and working capital. According to its areas of functioning, it is usually divided into industrial (production), financial (loan) and trade.

Among the theories of capital and profit, the most famous are the labor theory, the theory of capital as a good that generates income, and the theory of abstinence.

As an economic resource, it is advisable to divide capital into realAnd financial.

Representatives of most of the largest economic schools and directions tried, first of all, to explain in their own way the essence and significance of capital. This can be seen even from the titles of many works, for example: “Capital and Profit” by E. Böhm-Bawerk, “Capital” by Karl Marx, “Cost and Capital” by J. Hicks, “The Nature of Capital and Profit” by I. Fischer. capital market russia

Capital is the sum of goods in the form of intellectual, material, as well as financial resources, which are used as a resource for the production of even more goods.

Narrower definitions are also widespread.

For example, following strictly accounting definitioncapital should be considered all the assets of the company.

According to the economic definition, capital should be divided into two most basic types:

real (that is, in material or intellectual form);

financial, which is in the form of money and various financial assets.

Very often a third type is also identified human capital, which is formed as a result of investments in good education, continuous training, and health.

In the Russian Federation, fixed capital is often called fixed assets, although the latter is a somewhat narrower concept. Fixed assets are a set of material and material assets created by social labor that serve for a long time and lose their value in parts. At the same time, fixed assets also include intangible assets, brand value, etc.

Real working capitalconsists of material current assets. This includes:

productive reserves;

unfinished production;

finished products in warehouse;

goods for resale.

The classification of real capital (real assets, non-financial assets) is shown in Fig. 1.

Rice. 1 - Real capital structure

If, for example, tangible current assets are supplemented with funds in settlements with suppliers and customers (which include accounts receivable or installment payments to customers, as well as deferred expenses or advances to suppliers), cash in the enterprise’s cash register and wage expenses, then, in this case, we get by accounting definition working capital(current assets, current assets).

Capital generates income in the form of profit. Profit can be in various ways, for example:

company profit;

royalties of the owner of intellectual capital, etc.

Financial capital(also called financial assets) consists of cash as well as financial assets. As a consequence of the needs of economic circulation, financial capital provides income in the form of profit (for example, from shares), as well as interest (from bonds or bank deposits). Financial capital, which is provided in the form of a loan, is also called loan capital.

Concerning theories of capital, then they have a fairly long history.

For example, Adam Smith characterized capital as an accumulated stock of things, as well as money. David Ricardo interpreted capital as a material supply of means of production. That is, for example, a stick and a stone in the hands of a primitive man seemed to him, in fact, a similar element of capital, like cars and factories.

Ricardo's (also called Ricardian) approach to capital as a stock of means of production is reflected in the statistics of the national wealth of a number of countries, including the Russian Federation. For example, domestic statistics include in national wealth both fixed assets, tangible current assets, and household property (for example, durable consumer goods).

Marx, unlike his predecessors, approached the concept of “capital” as a category of a social nature. K. Marx considered capital a self-increasing value, which gives rise to the so-called surplus valueand only wage labor, according to Marx, can create it.

Among the interpretations of capital, one cannot help but highlight a rather interesting abstinence theory. Its founding fathers include, first of all, the English economist Nassau William Senior (1790-1864). The scientist viewed labor as the “sacrifice” of the worker, who sacrifices his leisure and peace, while capital is already the “sacrifice” of the capitalist. The latter refrains from using all his property for personal needs, converting a significant part of it into capital (that is, putting it into expanded reproduction).

According to the American economist I. Fisher (1867-1947), capital is what generates a flow of services, which subsequently turns into an influx of income. Moreover, the more the services of a particular capital are valued, the higher the income will be. Thus, the amount of capital should be assessed on the basis of the amount of income received from it. As an example: if renting out an apartment brings its owner $5,000 every year, and in a reliable bank he can receive 10% per annum on the money deposited in a fixed-term account, then the real price of the apartment is $50,000, since this is exactly the amount that should be deposited in bank at 10% per annum in order to receive $5,000 every year.

The definition proposed by Fischer is one of the most popular in the world.

1.2 Concept, features, structure of the capital market

Real capital, of course, in the modern economy fully retains its importance, but financial capital, which consists of money and also securities, is acquiring an increasingly significant role.

The coexistence of these two types of capital has led to the fact that the modern economy consists, in essence, of two sectors. The financial sector is based on financial capital, producing financial services, while at the same time, the real sector is based on real capital and producing goods as well as non-financial services.

As for the structure of the capital market (financial market), it can be represented as a set:

foreign exchange market;

market of derivative financial instruments (derivatives);

insurance market;

loan capital market (credit market);

the stock market (which, together with part of the credit market, forms the stock market).

Capital markets carry out a variety of transactions corresponding to major market segments.

Among the main ones, it is worth highlighting:

currency operations;

transactions with derivatives (derivative financial instruments);

operations in the insurance market;

operations on the loan capital market;

transactions with debt securities;

operations on the government securities market;

operations on the stock market.

In the modern world, stocks and bonds are the most popular means of investing capital due to the fact that they are highly liquid, that is, they can be sold profitably.

Demand for real capital is generated by non-financial investments (investments in real capital). This investment demand consists of the demand for a huge number of goods and services needed for the reproduction and renewal of real capital, called investment goods and services.

Basic investment goods are, as a rule, equipment, machinery, transport and construction materials for fixed capital, as well as fuel, raw materials, energy, materials and semi-finished products for working capital, plus investment services (design, geological exploration, etc. ).

The greatest demand for investment goods comes from firms. However, consumers of investment goods are also:

households (for example, when they buy machinery and equipment, build houses, purchase fuel and energy, etc.);

state and non-profit organizations (purchasing, for example, goods for defense needs, maintaining internal law and order, science, education, healthcare, etc.).

The supply of real capital is formed by producers and sellers of investment goods, that is, first of all, it is:

industrial firms;

construction;

agricultural;

transport;

trading;

investment services firms.

The structure of real capital markets essentially consists of markets for investment goods. They are very diverse, it is difficult to list them, however, the main ones stand out:

car markets;

equipment;

Vehicle;

fuel and materials.

Capital marketsname those segments of the capital market where financial assets are traded.

The structure of the capital market or financial market can be represented in different ways. Below, in Fig. 2 presents one of the most basic possible options.

Rice. 2 - Capital market structure

In the derivatives market, the foreign exchange market, and the insurance services market, short-term transactions (made for a period of up to 1 year inclusive) are most often carried out. In the credit market, which is divided into the markets for bank loans and debt securities, quite a lot of short-term transactions are also carried out.

As for the stock market, it is more characterized by the prevalence of long-term operations. The stock market, as well as part of the credit market (debt securities market), are often combined into one market - the stock market (securities market), although often the stock market sometimes means only the stock market.

Currency market- the largest of the capital markets.

This is due to the following reasons:

· serves this market, both foreign trade and international capital movements, with its inherent colossal scale;

· A huge number of purely speculative transactions are carried out in this market. These are transactions that are not aimed at exchanging currency for foreign trade or international capital movements, but at obtaining a margin from currency arbitrage (from changes in exchange rates);

· To hedge (insure) the risks of changes in exchange rates, as well as for purely speculative purposes, short-term currency instruments are issued in large quantities (these are, first of all, currency derivatives).

Currency trading, as well as currency derivatives, is carried out everywhere in the world, but the most significant role belongs to the world's financial centers. Judging by all types of foreign exchange transactions, London will take the lead (about 30% of global foreign exchange transactions), then New York and Tokyo. If we analyze the scale of trading in currency futures, then most of such operations are carried out in Chicago.

As for Russia, the bulk of foreign exchange transactions are carried out in Moscow, primarily on the Moscow Interbank Currency Exchange (MICEX).

You can exchange any currency in the world (if not directly, then through a third currency), however, nevertheless, exchange transactions gravitate towards several currencies of the world, which are also called world currencies. This primarily applies to the US dollar. The American dollar accounts for about half of all global currency transactions. Gradually, as the financial and economic situation in the EU stabilizes, the euro is becoming a competitor to the dollar. The Japanese yen, pound sterling, and the Swiss franc have much more modest positions.

Size of the global insurance marketestimated at 2.5 trillion. $. This is the amount of annual insurance payments or insurance premiums. Nowadays, there are a huge number of firms of varying sizes operating in the global insurance market. Many of these companies are multinational.

The insurance market is especially developed in economically developed countries. Sometimes even based on the degree of development of a given market, conclusions are drawn about the economic development of the country. In these countries, according to various estimates, insurance covers about 90-95% of all possible risks, while in Russia - less than 10%. Thus, it is insurance companies that are powerful investors in developed economic systems.

Various transactions take place in the capital markets operations, corresponding to the main market segments.

On foreign exchangeThe market (also called the forex market) exchanges some currencies for others. Currencies are exchanged on this market for completely different purposes, namely:

payments for foreign trade goods;

international investments;

debt recovery;

risk neutralization;

arbitration.

The development of electronic communications has made the market global, functioning 24 hours a day.

Trading of currency derivatives (derivative securities) is concentrated on commodity, stock or specialty futures exchanges.

Forwardforeign exchange transactions (forward transactions, forwards) can be concluded for any period in the future and for any amount. Forwards are illiquid because they are difficult to sell to a third party.

FuturesCurrency transactions (futures) are also based on transactions for the purchase and sale of currency in the future. However, unlike a forward, a future is an exchange traded agreement that requires delivery of a standard amount of an asset on a standard date.

Operations in the insurance marketTraditionally, they are aimed at protecting against damage to health and vital activity, pension provision and ability to work, and the policyholder or insured person (personal insurance), for his possession, use and disposal of property, as well as to cover payments to individuals or legal entities for harm caused to third parties (liability Insurance).

Operations with securities (operations on the stock market).

When classifying transactions with securities, one can proceed from several criteria. The division into cash and urgent transactions is the most important. Also distinguish arbitration deals, which are based on the resale of securities on various exchanges when there is a possible difference in their rates, as well as package deals, which are transactions for the purchase and sale of large quantities of securities.

For cash transactionit is typical that its implementation in most cases occurs immediately after the conclusion of the transaction.

Urgent operations, in essence, are supply agreements, according to which one party undertakes to provide a certain amount of assets within a certain period of time, and the other, in turn, immediately accepts them and pays a pre-agreed amount.

Section 2. Features of the functioning of the capital market in Russia

2.1 Evolution of the capital market in Russia. Development of the capital market in Russia in modern conditions

The private sector of the Russian economy that emerged as a result of privatization turned out to be unable to fully solve a number of the most important problems from the point of view of the main part of society. First of all, the thesis about the obviously high efficiency of asset management in private business was untenable. Assets that are privately owned, belonging to specific personalized owners, produce an effect only under certain conditions:

competition;

strict adherence to the rule of law;

directing the energy of private economic activity into areas that do not have a depressing effect on the development of other socio-economic spheres.

Private investment in the real sector in the new post-Soviet system began to acquire noticeable proportions only after the financial crisis of 1998, which was caused largely by the fall in prices for the main items of Russian raw material exports. This factor has significantly reduced the possibility of relatively easy “taking of money” from the state and the population. This motivated representatives of large businesses to invest part of their funds in less profitable areas of activity.

It would also be worth mentioning the migration of capital abroad as a significant factor in the formation of supply and demand in the Russian market. Historically, already at the end of the 1980s, the illegal export of capital from the country began in the USSR. This trend also prevailed in the 1990s. Capital was haphazardly invested in the form of loan capital, mainly in non-commercial real estate, or simply “eaten up” abroad. In the 2000s, the nature of the export of capital from the Russian Federation has already fundamentally changed, since a clear trend towards increasing entrepreneurial capital has emerged.

Foreign investments, as well as foreign assets obtained with their help, are gradually beginning to play a special role in the Russian economy, as the first domestic TNCs began to appear and develop successfully. Thus, gradually a rather unique, parallel external economy began to form in our country, closely connected with the internal one and exerting an increasingly noticeable influence on its development, contributing to its integration into the global economy. In principle, this phenomenon is characteristic of all developed countries, without exception, that actively participate in the process of globalization.

Foreign expansion quite often provides a synergy effect for the development of the entire business of the parent company, which is a positive factor for the entire Russian economy.

Concern Gazprom, which ranks second in the world in terms of sales among oil and gas producing companies, also seeks to participate in projects for exploration, production, transportation and marketing of hydrocarbons in third countries as part of the company’s global presence strategy in the global oil and gas market, using both participation in competitions and auctions and asset exchange operations.

Rosneft is also making ambitious plans, expecting in the medium term to become one of the five largest global corporations by capitalization.

Judging by the number of companies operating abroad that are associated with Russian capital, we can say that the basis of the foreign economy of the Russian Federation is made up of offshore companies.

A logical question arises: “Is it worth limiting the foreign expansion of Russian business?” It is worth saying that this phenomenon is an objective process that is caused by the trend towards market globalization of the world economy and the increasing integration of Russian business with it. Consequently, by taking strict restrictive measures, it is possible to drive part of the relevant financial flows into the “shadow” channel.

On the other hand, given the negative consequences of foreign expansion of Russian business and the development of a parallel foreign economy, it is necessary to develop and implement a balanced policy in this area. Two main directions can be distinguished:

government support for foreign expansion of domestic business;

market and administrative measures that would help reduce the unjustified outflow of capital from Russia and bring the domestic and foreign economies closer together.

In the Russian Federation today there is no well-thought-out state policy regarding investment business expansion.

Also, one of the main problems is that enterprises make very little use of such a source of capital as the stock market, and, in fact, are not ready to attract external strategic investors.

1.2 State and prospects of the capital market in Russia

The priorities of Russian policy to support foreign investments of domestic companies should be assistance:

modernization of the country's economic system;

export diversification;

improving the supply of production with raw materials;

saturation of the domestic market with consumer goods;

restoring the lost positions of Russian companies at the international level;

reducing the outflow of intellectual capital abroad and the shortage of qualified labor resources;

environmental protection and reduction of environmental pollution;

conversion of financial debt of foreign countries, etc.

All of these listed priorities correspond to national interests in the long-term and sustainable development of the country.

Since the effectiveness of foreign investments in the Russian economy is low, the problem of creating a targeted program for monitoring foreign direct investment is urgent.

According to Navoi A., it should include:

development of a strategy for their implementation (required volumes of attracting direct investment, list of priority industries, government support measures);

creation of a clearer system for monitoring direct investments (details by industry, type of investment, country and industry affiliation of investors, determination of the share of repatriated capital, investment terms);

analysis of the effectiveness of foreign direct investment (the share of foreign investments directed to updating the production assets of a controlled enterprise, the dynamics of labor productivity at the acquired enterprise, the state of competition in the industry, the share of profits exported by direct foreign investors abroad.

Conclusion

The transformation of the Russian economy from an administrative-command economy to a market economy has necessitated the creation of a loan capital market in the Russian Federation to serve the needs of the economy. However, the true development of the loan capital market in the country is possible with the corresponding development of other markets, such as:

Ø market for means of production;

Ø consumer goods market;

Ø labor market;

Land market;

Ø real estate market.

All these markets need funds, which the capital market provides them with.

.The main theories of capital that have contributed to the modern understanding of the concept of “capital” are covered.

.A modern view of capital, the capital market and its structure is presented. The issues of supply and demand in the market for capital services, loan capital and capital goods are reflected.

.The evolution of the capital market in Russia and the current state of the market are shown. Recommendations for improving the current state of the capital market are reflected. It has been revealed that the capital market is inextricably linked with state policy (due to both instruments of influence on the market and the fact that the state is either a co-owner of most of the country's large industries or creates state corporations). In turn, the Russian market is inextricably linked with the world market (lending in the West, foreign investment in the Russian economy).

List of sources used

1. Bukasyan G.M. Economic theory textbook. - M.: INFRA-M, 2011.

2. Vlasievich Yu. Russian Economy: effects and paradoxes. M.: UNITY-DANA, 2011.

M.A. Sazhina, G.G. Chibrikov. Economic theory. - M.: Infra-M, 2012.

Nureyev R.M. Microeconomics course. - M.: Norma - Infra-M, 2010.

Russian economy: financial system. / Ed. Gerasimenko V.V., Gorodetsky D.E. - M.: MSU, TEIS, 2012.

Russian capital markets: is there life on Mars? // Stocks and bods market. - No. 4. - 2010.

Sviridov O.Yu. Money, credit, banks. - Rostov-on-Don: Phoenix, 2010.

Modern economics. / Ed. Mamedova O.Yu. - Rostov-on-Don, 2001.

Economics: Textbook / Ed. Bulatova A.S. - M.: BEK, 2012.

Economic theory / Ed. A.I. Dobrynina, L.S. Tarasevich. - St. Petersburg: Peter, 2011.

http://www.grandars.ru

Http://cyberleninka.ru.

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The capital market is a market in which the subject of purchase and sale is capital (as you already know, capital includes not only money or monetary aggregates). For a more detailed description, economists distinguish separately monetary relations and the stock market.

Monetary relations are characterized by payment (the loan is issued at a certain interest rate), repayment (the loan must be repaid) and urgency (the loan agreement contains the deadlines for paying the loan and interest on it).

The stock market is a market for securities. The issuing enterprise (i.e., an enterprise that issues securities with the permission of the relevant government bodies) has the opportunity to raise funds necessary for its operation and development by issuing shares. The state cannot issue shares (after all, a share gives ownership rights to its owner), but has the right to issue bonds.

In the economic literature you can find a huge number of definitions of capital. Most universally, capital is a value that generates income.

The price of capital as a factor of production is interest. The owner of capital, providing it to an entrepreneur or bank for temporary use, thereby renounces certain purchases and the right to dispose of it for a certain time. Accordingly, it is quite natural that he should receive

certain compensation, i.e. percent. It is very important to highlight the concept of real interest rate.

The interest rate we face when we deposit money in a bank is nominal. It does not take into account the inflation rate for us. The interest rate, adjusted for the depreciation of money due to rising prices, is called real (naturally, banks will not name it, because it can be negative, and in this case the depositor loses compared to a person who chose an expensive purchase over a deposit).

The nominal interest rate can be defined as the ratio of the income on the capital lent to the amount of capital lent.

The interest rate on a deposit is usually always lower than on a loan.

When making investment decisions, the firm compares the potential (predicted) return on invested capital with the market interest rate on deposits. When deciding on the amount of external financing, the owners of the enterprise are guided by the loan interest rate.

When calculating interest, simple and compound interest formulas are used. When using the simple interest formula, the accrual is always made on the original (invested) amount, which is beneficial for the investor with short-term (less than 1 year) deposits.

When using the compound interest formula, the accrual is made on the accrued amount, i.e., when investing 1,000 rubles at 15 percent per annum in the second year, 15 percent will be accrued from the amount of 1,150 rubles. Mathematically, the formula for calculating compound interest is as follows:

R(1 + r)n, where

R - the amount of the initial deposit;

r - percentage of deposit in decimal fractions;

n is the number of interest periods.

The inverse formula for compound interest

terizes the calculation of the current equivalent of a future amount of money (this process is called discounting):

PV is the current equivalent of a future amount of money; FV is the future amount of money.

The second (right) factor is called the discount factor or FM2, it is found using the corresponding table.

Discounting is of fundamental importance for an investor, since it allows one to compare payments and income over different time periods. Using discounting, you can calculate different options for investing your money. However, by “r” you can mean any factors that reduce your income, such as inflation or opportunity cost.

Questions to reinforce educational material:

1. What are the features of resource markets?

2. How does demand in resource markets differ from demand in the consumer market?

3. How can we predict future trends in resource markets?

4. Can nominal and real wages be the same?

5. Is wages the cost of labor produced by an employee?

6. What is unique about land as a factor of production?

7. Do you think that large agricultural enterprises have significant advantages over farms? Give reasons for your point of view.

8. What are the features of the capital market?

9. Can nominal and real interest rates be the same?

10. Why is the deposit rate usually different from the loan rate? Which of the following rates is higher? Give reasons for your answer.

11. What is discounting? Assignments and tasks for consolidating educational material:

1. You are offered to take out a loan of 40,000 rubles. at 20% per annum in rubles for a period of 5 years. Interest will be calculated using the compound interest formula. The loan is repaid in a lump sum upon expiration of the loan agreement (i.e. after 5 years). How much will you have to repay?

2. What is the current equivalent of 29,000 rubles that you plan to receive in a year with an expected annual inflation of 17%?

3. You are offered to open a bank account. The bank will pay you 12% per annum in rubles. You forecast inflation to be 18% for the year. What is the bank's real interest rate?

Capital market- this is a segment of the financial market in which long-term credit resources are sold and purchased, as well as securities with a circulation period of more than a year.

The functioning of the capital market allows enterprises to solve problems of both the formation of investment resources for real investment projects and financial investment (long-term financial investments).

Loan capital market

The loan capital market is a set of financial markets in which capital is redistributed between lenders and borrowers with the help of intermediaries based on supply and demand for capital. Intermediaries in the loan capital market are banks, funds and other specialized financial firms.

The main task of the loan capital market is the transformation of idle funds into loan capital.

Borrowers (debtors) are, first of all, business firms that use borrowed funds to create new capital. Borrowers also include individual consumers, who borrow funds to purchase durable goods, and the government, which borrows to cover budget deficits and finance the creation of public facilities. However, if the former have a demand for capital in the form of money, then the latter have a demand for money.

The demand for money from households and the state is not related to entrepreneurial activity. Demand for loan capital is the sum of all borrowed funds for which borrowers have demand at a given interest rate. The demand for borrowed funds depends on the profitability of entrepreneurial investments.

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Chapter 24. Financial market

Financial market structure
State and financial market
Features of the Russian financial market
2. Securities market
Types of securities
Securities market in Russia
3. Bonds and shares
Bonds
Stock
Amount of dividend. Earnings on shares
Bills of exchange
4. Stock exchange and over-the-counter market
Mediation
Exchange members and participants
5. Types of transactions on the securities market
Cash and urgent transactions
Purchase and sale of securities
State regulation of operations on the securities market
6. How to read stock indices, quotes and ratings
Stock quotes in Russia and abroad
Bond ratings
Financial globalization
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Self-test questions

Financial market(loan capital market) is a mechanism for the redistribution of capital between lenders and borrowers with the help of intermediaries based on supply and demand for capital. In practice, it is a set of credit organizations (financial credit institutions) that direct the flow of funds from owners to borrowers and back. The main function of this market is to transform idle funds into loan capital.

1. Money market and capital market

Financial market structure

The financial market includes the money market and the capital market (Fig. 24.1). Under money market refers to the market for short-term credit operations (up to one year). In turn, the money market is usually divided into accounting, interbank and foreign exchange markets, as well as the derivatives market.

Rice. 24.1. Financial market structure

The accounting market is one in which the main instruments are treasury and commercial bills, and other types of short-term obligations (securities). Thus, a huge mass of short-term securities circulate on the accounting market, the main characteristic of which is high liquidity and mobility.
The interbank market is part of the loan capital market, where temporarily free monetary resources of credit institutions are attracted and placed by banks among themselves, mainly in the form of interbank deposits for short periods. The most common deposit terms are one, three and six months, with maximum terms ranging from one to two years (sometimes up to five years). Funds of the interbank market are used by banks not only for short-term, but also for medium- and long-term active operations, regulation of balance sheets, and compliance with the requirements of government regulatory bodies.
Currency markets serve international payment turnover associated with the payment of monetary obligations of legal entities and individuals in different countries. The specificity of international payments lies in the absence of a means of payment generally accepted for all countries. Therefore, a necessary condition for settlements on foreign trade, services, investments, interstate payments is the exchange of one currency for another in the form of purchase or sale of foreign currency by the payer or recipient. Foreign exchange markets are official centers where currencies are bought and sold based on supply and demand.
M r o k d e r i v a t i v o v. Derivatives (financial derivatives) are derivative financial instruments that are based on other, simpler financial instruments - stocks, bonds. The main types of financial derivatives are options (giving their owner the right to sell or buy shares), swaps (agreements to exchange monetary payments over a certain period of time), futures (contracts for future delivery, including currencies, at the yen fixed in the contract).
Capital market covers medium- and long-term loans, as well as stocks and bonds. It is divided into the securities market (stock market) and the market for medium- and long-term bank loans. The capital market serves as a critical source of long-term investment resources for governments, corporations and banks. If the money market provides highly liquid funds mainly to meet short-term needs, then the capital market provides long-term needs for financial resources.
In the market for medium- and long-term bank loans, borrowed funds are issued to companies to expand fixed capital (updating equipment and increasing production capacity). Such loans are usually provided by investment banks, less often by commercial banks.
The stock market ensures the distribution of funds between participants in economic relations through the issuance of securities that have their own value and can be sold, purchased and redeemed. The main functions of the stock market are:
. in the centralization of temporarily free funds and savings to finance the economy;
. in the flow of capital with the aim of concentrating it in technically or economically advanced industries and the most promising regions;
. in eliminating the state budget deficit, in its cash execution and smoothing out the unevenness in the receipt of tax payments;
. in information about the state of economic conditions, based on the state of the securities market.
The stock market can be considered as a combination of primary and secondary markets. The primary market arises at the time of issue of securities; financial resources are mobilized on it. The main issuers of this market are private companies and government agencies, the main objects of transactions are securities. The placement of newly issued securities occurs through either subscription or open sale.
On the secondary market, these resources are redistributed, and even more than once. In turn, the secondary market is divided into exchange and non-exchange. At the latter stage, the purchase and sale of securities occurs, which for some reason are not listed on the stock exchange (for example, through banks).
Various types of securities, forms of deposits and lending have received a general definition in economic literature and official documents - financial instruments.

State and financial market

The relationship between the state and the financial market is multifaceted. The state can act as a lender and borrower, establish general rules for the functioning of the market and exercise day-to-day control over it, conduct official monetary policy and even broader economic activities through the market.
The state can also encourage and protect the development of the financial market (for example, stock exchanges in a number of countries are government institutions). After all, the stable functioning of the national economy largely depends on the state of the stock market. First of all, such a policy is carried out through giving the market and its components organizational completeness, standardization of operations and strict control. In countries with market economies, these issues are dealt with by special institutions such as the Federal Securities and Exchange Commission in the USA or the Federal Securities Market Commission in Russia.
At the same time, the international financial crisis that began in 1997 clearly demonstrated that the methods of regulating the financial market no longer correspond to the increasing level of development and integration of financial markets.
Financial markets are inherently unstable. The increasing interaction of financial markets and increasing volumes of capital flows increase the risk of instability of national markets and the danger of its spread to other markets. Therefore, the role of government regulatory bodies has increased with the increase in financial flows, the expansion of financial market instruments, and the emergence of new market participants.

Features of the Russian financial market

The so-called new financial markets (emerging markets) in developing countries and countries with economies in transition have some features. There are now more opportunities for them to attract external capital and information about the experience of other countries than during the formation of the financial markets of developed countries in the past. Therefore, processes in new markets are characterized by sharp fluctuations and a faster pace of development.
During the financial crisis in Russia, the need emerged to form a structure of financial instruments that ensures the reorientation of financial flows to serve the needs of final borrowers, increasing the efficiency of the influx of free resources and their investment in well-thought-out economic projects. In conditions where the decline in the competitiveness of government securities creates real opportunities for the development of other financial instruments, the prerequisites are being formed for corporate issuers to enter the Russian financial market.
There has also been a reassessment of the role of the financial market. It is no longer considered as a driver of further development of the economy as a whole. Moreover, it is becoming increasingly clear that it is the development of the real sector of the economy, the transition of producers to the predominant use of monetary forms of payment that should become a prelude to the effective expansion of operations of financial and credit institutions with the real sector and the subsequent revitalization of the financial market.
The peculiarities of the Russian financial market include the importance of its social component. Citizens of Russia require a variety of ways to invest their savings and ensure personal financial security, therefore, when formulating policy regarding the securities market, the state not only proceeds from the needs of the economy and the availability of investments, but also focuses on taking into account the needs of the population as a whole. The severity of social issues in the development of the capital market is also due to the fact that Russian citizens have lost a significant part of their savings as a result of inflation, as well as the activities of financial pyramids that deceived investors. To resolve these issues, the Federal Law “On the Protection of the Rights and Legitimate Interests of Investors in the Securities Market” was developed and entered into force in March 1999.

2. Securities market

Medium- and long-term securities are traded on the securities market. Under security is understood as a document certifying, in compliance with the established form and mandatory details, property rights, exercise or transfer, which are possible only upon presentation. With the transfer of a security, all rights certified by it are transferred in the aggregate.
Securities are usually called fictitious capital for the reason that they are representatives of real capital (real funds) and to a certain extent reflect their value.
In Russia, securities include shares, bonds, certificates of deposit and savings, checks, bills, various government securities, privatization checks (vouchers), options, futures and other documents.

Types of securities

There are many types of securities operating in a market economy. They can be classified according to several criteria.
One of them is various groups of issuers. Typically there are three such groups: the state, the private sector and foreign entities. Government securities are issued and guaranteed by the government, ministries and departments or municipal authorities.
Private sector securities are usually divided into corporate and private. Corporate securities are issued by non-state enterprises and organizations. Private securities can be issued by individuals (for example, promissory notes or checks).
Foreign securities are issued by non-residents of the country. Securities can be divided into registered and indentureable. The name of the owner of the security is registered in a special register maintained by the issuer or an external independent registrar. A bearer security is not registered in the name of the owner with the issuer.
Another sign of the classification of securities is their economic nature. In this case, the following are distinguished: certificates of ownership (shares, checks, money certificates); loan certificates (bonds, bills); contracts for future transactions (futures, options).
All these three types of securities exist and circulate in Russia (Table 24.1).

Table 24.1 Types of securities traded on the Russian stock market

PRECIOUS SECURITIES Fixed with income are, first of all, shares, i.e. securities certifying ownership of a share in the capital of a joint-stock company and giving the right to receive part of the profit in the form of a dividend. According to Russian legislation, a share is an issue-grade security that secures the rights of its owner (shareholder) to receive part of the profit of the joint-stock company in the form of dividends, to participate in the management of the joint-stock company and to part of the property remaining after its liquidation.
Fixed income securities (also called debt obligations) are represented by bonds, certificates of deposit and savings certificates, checks and bills.
ABOUT BONDS - debt obligations of the state, local governments, enterprises, various funds and organizations, usually issued in large quantities. They are evidence that the body that issued them is a debtor and undertakes to pay interest on it to the owner of the bond for a certain time, and upon the maturity date, to repay its debt to the owner of the bond. In either case, the bond represents debt, and the holder is a creditor (but not a co-owner like a shareholder). According to Russian legislation, a bond is an issue-grade security that secures the right of the holder of this security to receive from the issuer of the bond, within a specified period, its nominal value and the percentage of this value fixed in it or other property equivalent.
Deposit certificate is a financial document issued by credit institutions. It is the institution's certificate of deposit of funds, certifying the depositor's right to receive the deposit. There are different certificates of deposit on demand and time ones, which indicate the period for withdrawal of the deposit and the amount of interest due. Certificates of deposit are widely accepted by investors, various companies and institutions.
Savings certificate is a written obligation to deposit funds by an individual in a credit institution, certifying the investor’s right to receive the deposit and interest on it. There are savings certificates, registered and bearer.
A check is a monetary document of the established form containing an unconditional order from the drawer to a credit institution to pay its holder the amount specified in the check. As a rule, the payer of a check is a bank or other credit institution that has such right.
A promissory note is an unsecured promise to pay a debt and interest on it at the appointed time. This type of securities ranks last among the company's debt obligations. Like checks, promissory notes are also issued by private individuals.
GOVERNMENT SECURITIES are debt obligations of the government. They differ in issue dates, repayment periods, and interest rates. In a certain sense, this is an alternative to money creation and, therefore, inflation in the event of a government budget deficit.
Currently, in most countries there are several types of government securities in circulation: the first is treasury bills with a maturity period of usually 91 days; the second - treasury bonds with a maturity of up to 10 years; the third is Treasury bonds with maturities ranging from 10 to 30 years. These types of securities are issued to finance short-, medium- and long-term government debt. Accordingly, interest payments on them also differ. So, in the USA in the 90s. they amounted to: for treasury bills - about 6%, for treasury bonds - about 7%. In Russia in the 90s. produced:
. government short-term zero-coupon bonds (GKOs) since 1993. The issuer is the Ministry of Finance of the Russian Federation. GKOs are issued for a period of 3, 6 and 12 months and are placed through institutions of the Central Bank of the Russian Federation;
. treasury obligations (KOs) in non-documentary form in the form of an entry in accounts, as well as GKOs;
. federal loan bonds (OFZ) since 1995, circulating in a unified system together with GKOs in non-cash form, with a variable coupon interest and a validity period of more than one year;
. government savings loan bonds (GSLO) to bearer since 1995, intended mainly for the population;
. domestic foreign currency loan bonds (OVVZ), which are a means of restructuring domestic foreign currency debt.
Along with the central government and its agencies, local governments issue securities for debt financing. This is a different type of securities - municipal bonds. Like other bonds, they represent obligations to repay a debt by a certain date with the payment of fixed interest. Municipal bonds are also issued in Russia.

Securities market in Russia

The securities markets emerging in countries with transition economies, which include the Russian stock market, are characterized by many common problems. At the same time, the Russian stock market has a number of specific features.
First, the development of efficient securities markets usually accompanies the growth of the entire national economy. In Russia, the origin and formation of the stock market, its certain development, took place against the backdrop of a constant decline in production. Such a difference in the evolution of the securities market and general economic processes causes serious crisis phenomena in this market, as evidenced by the experience of 1998-1999. At the same time, the underdevelopment and imperfection of the stock market itself prevents overcoming the trend towards narrowing reproduction.
Secondly, the “opacity” of the market (i.e., insufficient or inaccurate information about companies and banks issuing securities), the riskiness of operations on it, the predominance (until 1999) of government debt to cover the budget deficit caused the dominance of short-term valuable papers. And this, in turn, diverts available funds from long-term investment, which is always the most important factor in economic growth.
Thirdly, inflation and inflation expectations have a destabilizing effect on the Russian securities market. The risk of money depreciation deters investors from making long-term strategic investments.
Foreign experience shows that the negative effects of inflation can be overcome to a certain extent by issuing indexed securities. The income on such securities is indexed adjusted for the inflation rate. In Russia, a market for indexed stock instruments has not yet been created, which aggravates the harmful impact of inflation on the securities market.
The infrastructure of this market is gradually developing, and the level of qualifications of its participants is increasing. The Professional Association of Stock Market Participants (PAUFOR) was created to regulate trading in securities. The Russian Trading System (RTS) is in operation, developing uniform rules for transactions. Thus, along with the improvement of government influence on the stock market, the sprouts of its self-regulation, characteristic of countries with developed market economies, are appearing.
During the transition to a market, a phenomenon arises that, as a rule, is not typical for a developed market economy. We are talking about a sharp stratification of shares. A small (in terms of company size) group of stocks appears, which are usually called “blue chips”. These are the most reliable shares issued by large companies that, in a transition economy, manage to develop quite successfully and make profits.
The blue chips of a very few companies are competing with all the other shares of many public companies. These securities are low-liquid, the risk of investing in them is high, and they are difficult to sell on the secondary market. The gap between the position of blue chips and all other stocks in the Russian economy is unusually wide. Transactions with blue chips account for about 90% of domestic stock turnover.
In 1999, companies whose shares were considered blue chips included RAO UES of Russia, LUKoil, Mosenergo, Rostelecom, Yuganskneftegaz and a number of others. Their shares are in demand not only among Russian but also foreign investors. Blue chips are gradually starting to enter foreign stock markets.

3. Bonds and shares

Let's take a closer look at the two main types of securities in the world - bonds and shares.
The stock and bond markets are closely interconnected and often funds from one of them are directly pumped to the other. This connection also operates at the level of joint stock companies, since many of them issue both types of securities, and the performance of the company’s shares affects the performance of the bonds behind them.

Bonds

The most common type of bonds in the world is corporate, i.e. company bonds.
The attractiveness of company bonds (as well as other bonds) is that, unlike shares, they can be sold at an issue price (issue rate), which is lower than their nominal value (nominal rate), for example, for 98 rubles. instead of 100 rub. Such a discount on the price is called d i z a g i o. In addition, an agreement can be reached that the bonds will be redeemed not at par, but at a higher value, for example, 103 rubles. instead of 100 rub. Thus, a premium arises, or a g i o, which, at the appropriate maturity of the bonds, is presented as additional income (along with interest payments).
The total income (interest and premium or disaggio) of the bond is considered an important indicator when assessing the terms of the bond. In most cases, investors purchase these securities at a rate that differs from the nominal rate. Accordingly, the yield and nominal interest on a bond may vary significantly. Income on fixed income securities is calculated using the formula:

Y = N. 100, (24.1)
P

where Y is income; N—nominal interest; P is the issue rate of the security.

Example 24.1. Let's say you bought a bond of 100 rubles at par, which has a yield of 80% and a maturity of five years. Your income on this bond:
0.8 .100 = 80 rub.
Let us further assume that the same bond was purchased with disaggio for 95 rubles, and not for 100 rubles. The income on the bond is the same - 80 rubles. What will be the increase or decrease?
80 rub. (percentage) + 10 rub. (annual interest) = 90 rub.
The yield is 94.7%. Note, however, that the methods discussed are used only to derive approximate returns. Accurate numbers can only be obtained using a computer.

Currently, there are many types of bonds in world practice. Here are some of them: mortgages and non-mortgages, guaranteed, with a decreasing fund and expandable, convertible, “perpetual”, coupon, discount, with an order, with a “floating” rate and a “floating” interest, with a “litter”, etc. For example, perpetual bonds are bonds with no maturity date; coupon bonds - bonds containing cut coupons, on which interest income is paid after a certain period; discount bonds are those that sell on the secondary market for less than par. From the point of view of world experience, the Russian practice of issuing bonds is still quite primitive.
Thus, bonds as debt instruments provide greater protection against loss of investment than stocks and therefore, until recently, traditionally provided less income. The lowest income to this day is usually provided by government bonds that have an almost complete guarantee of repayment.

Stock

Of the securities with non-fixed income, the most important are shares. In order to carry out a public issue of shares, the company is required to provide detailed information about its financial position, after which it will be given official permission for the said issue. Typically, a company is required to provide information about its funds (assets), debts, profits and losses over the past few years, all previous issues of securities and their terms.
Once approved, the company announces the issue of shares and distributes them, usually through an investment bank. The first sale of shares (the so-called primary distribution) is made at the nominal price. True, if the issue is distributed over several months, with a high general rise in prices, the selling price of the shares also changes upward.
Today in Russia shares are issued both in cash and non-cash form. In the first case, the shareholder receives a special document with a signature and seal, which states that this is a share. With a non-cash form of shares, an entry is simply made into an account opened in the name of the shareholder. In most countries, the cash form of issuing shares is gradually becoming a thing of the past. In the USA, for example, since 1983, all securities of joint stock companies are issued only in non-cash form, although certificates of previously issued securities are also in circulation.
After the issue and initial placement, the “working” life of the shares begins. Let's look at how this happens using a hypothetical example.

Example 24.2. Let’s say that through the issue of shares we managed to collect 10 million rubles needed to rent a building, purchase machinery and equipment, hire workers, etc. A total of 10 thousand shares were sold at 1000 rubles. Each such share gives its owner the right to receive a dividend. Let's say, if a company made a profit of 2 million rubles this year, then part of this amount (let's say 1 million rubles) is distributed among shareholders of 100 rubles. per thousandth share as a dividend.

One of the main features of a share as a title of ownership is that the shareholder does not have the right to demand that the joint stock company return the amount contributed to it. This is what allows a joint stock company to freely dispose of its capital without fear that part of it will have to be returned to shareholders. It follows that a share is a perpetual security; it is not issued for a predetermined period. The life of a share ends only with the cessation of the existence of the joint stock company. This occurs during voluntary liquidation, acquisition or merger with another company, or bankruptcy.
A share as a title of ownership has such a basic feature as the right to vote. It implements the opportunity for each shareholder, as a co-owner of the capital of a joint-stock company, to participate in the management of the latter.
Another of the main features of the share is the right to a portion of the profits, but the joint-stock company does not undertake any unconditional obligations to make regular payments to the holders of its shares. If a company does not pay dividends, shareholders do not have the opportunity to recover them in court or declare the company bankrupt. They are co-owners of capital and voluntarily take on risks associated with the possibility of losses or ruin of the company. This implies the possibility of dividend fluctuations depending on the performance of the joint-stock company in a given period. After all, a joint stock company can decide whether to distribute the profit it receives in full or only part of it among shareholders. In the latter case, the other part will be retained earnings remaining at the disposal of the company.
The stock has another very important advantage over fixed-interest securities. Their dividend growth has generally outpaced inflation. Inflation, the main scourge of creditors, does not significantly affect share capital. We can say that stocks are anti-inflationary.

Amount of dividend. Earnings on shares

The amount of annual dividends depends on the profit indicated in the balance sheet of the joint-stock company. Typically, a joint-stock company strives to pay dividends, growing if possible, and thereby demonstrate to the public opinion its consistent development or imitate it. In addition, when buying, holding or selling a share, a shareholder proceeds from two main points. The first of them is the level of annual dividend:

Y = D. 100, (24.2)
P

where Y is earnings per share; D—annual dividend; P is the purchase price of the share.
It is usually compared to the interest paid on other forms of savings.

Example 24.3. If a share with a par value of 500 rubles. purchased at the rate of 2500 rubles. and an annual dividend of 100 rubles is paid on it, then the income per share will be: (100:2500)· 100 = 4%.

Such income per share can hardly be considered attractive for an investor compared to bank investments. In this case, much more important is the expectation that the stock exchange price will increase and, as a result of a profitable sale of the security, it will be possible to make a profit. Thus, the second point affecting the investor when buying a stock is the expectation that its rate will rise. In modern conditions, this is the main thing that determines the stock price.

Bills of exchange

In a normally functioning economy, bills of exchange serve the sales process: in order to sell products and create convenience for the buyer, suppliers defer payment by providing a commercial loan formalized by a bill of exchange.
Discounting, or discounting of a bill of exchange, is, firstly, the purchase of a bill of exchange before its expiration date at a price below par value and, secondly, in banking practice, the discount interest charged by banks upon purchase ( accounting) bills.
In Russia, bill circulation is developing in conditions of a deep crisis in production and the monetary system. This is where its features come from. An ordinary bill is a security issued to secure a loan and is not intended to be used as a means of payment. In Russian conditions, a bill of exchange rather solves a dilemma for the seller: either receive a buyer’s bill of exchange for the shipped products, or neither money nor a promissory note.
In Western practice, a bill of exchange is, as a rule, not used as a multi-negotiable document. The recipient of the bill seeks to present it for payment through specialized factoring organizations or bill departments of banks. In Russia, bills of exchange have become a unique form of money, their surrogate. They are used in settlements between business entities, between firms and government bodies for paying taxes, etc. Bills of exchange are issued in various sectors of the economy by enterprises, ministries, banks, local authorities, the Ministry of Finance, the Treasury, etc. Thus, in Russia, bills of exchange have gotten out of control, are circulated not according to established laws, but according to conditions determined by the issuers, and have begun to replace money in circulation.
To solve the problems existing in the field of bill circulation, the Association of Participants of the Bill Market (AUVER) was created in October 1996. The primary objectives of the association are to collect information about the bill market, including about its unscrupulous participants; ensuring the listing of bills; development of uniform standards and rules for bill circulation; establishment of a clearing house; development of the all-Russian infrastructure of the bill depository, trading system, etc.
In Russia there is a Federal Law “On Bills of Exchange and Promissory Note” dated March 11, 1997, which coincides with the Geneva Convention on a Uniform Law on Bills of Exchange and Promissory Note

4. Stock exchange and over-the-counter market

Stocks and bonds have become popular investments due to the fact that they can be sold at a profit. Sales and purchases are carried out on the securities market, otherwise known as the stock market. There are two main types of stock market: exchange-traded and over-the-counter.

Mediation

The enormous volume and variety of securities make buying and selling them a difficult task. The purchase and sale itself is regulated by a huge number of rules and restrictions. In addition, different types of securities are traded in different markets.
Those who take on the function of conducting transactions with securities become intermediaries, or, in other words, professional participants in the securities market. They can operate both on the stock exchange and outside it, since not all securities are quoted on stock exchanges. Spatially, the intermediaries are separated, but they are interconnected and form a single whole, constantly coming into contact with each other. It is this unified whole that is called the securities market.
In a single stock transaction (on or off the stock exchange) there are three parties involved: the seller, the buyer and the intermediary. The mediator can act in two ways. Firstly, by purchasing securities at his own expense, he becomes their owner for a time and receives income in the form of the difference between the buying and selling rates. Such intermediaries are called dealers. Secondly, he can work as an attorney or for a certain percentage of the transaction amount, i.e. for a commission, simply accepting instructions from its clients to buy and sell securities. In this case, he is called a broker, or manager. In addition, on his own behalf, he carries out transactions with other people's securities transferred to him in trust for a certain period.
All types of professional activities in the securities market are developing in Russia. In addition to dealer and brokerage activities, these are clearing (activities for determining mutual obligations in the securities market), depository activities (storage of securities certificates), activities for maintaining a register of securities owners and other intermediary services.
Traditionally, the most representative securities market is the stock exchange.

The concept of a stock exchange and exchange systems

Stock Exchange is a regularly functioning and organized part of the securities market (stocks, bonds, treasury notes, bills, certificates), where purchase and sale transactions are carried out with these securities through the mediation of exchange members.
The exchange strictly ensures that none of the sellers or buyers can dictate prices. Finally, all transactions are concluded by open bidding and full information is provided about each of them. First, it is sent to the exchange's electronic display and then published in print.
Stock values are securities with which transactions are permitted on the stock exchange. Trading is carried out either in batches for a certain amount, or by type, while transactions are concluded without the presence of the securities themselves on the exchange.
The exchange rate of securities is determined by the following factors:
. profitability (dividends, interest) current and expected;
. the size of the bank interest rate (loan interest), the price of gold, certain goods and real estate, since investments in bank accounts, gold, goods and real estate are an alternative to investing temporarily available funds;
. stock speculation.
Institutions similar to exchanges operated in Babylon, Ancient Egypt and Phenicia. But the first permanent exchange arose in 1406 in the Dutch city of Bruges near the house of Van der Burs. On the house was painted a coat of arms in the form of three purses, which in Late Latin were designated by the word “bursa”. Hence, the subsequently created commodity and stock markets began to be called exchanges: in Antwerp (1460), Lyon (1462), Toulouse (1469), Amsterdam (1530), Paris (1563), Hamburg (1564), Cologne (1566), Gdansk (1593), Berlin (1716), Vienna (1771). The first St. Petersburg stock exchange in Russia was organized in 1703. The first international one was the stock exchange in Antwerp, which had its own permanent premises, above the entrance to which was the famous inscription: “For trading people of all nations and languages.” However, all of these were commodity exchanges, although a number of them gradually established stock departments.
With the founding of the Dutch East India Company in 1602, the role of the most important world trading center passed to the Amsterdam Stock Exchange. Here, futures transactions appeared for the first time, and the technology of exchange transactions reached a fairly high level. Therefore, the Amsterdam Stock Exchange, organized in 1608, is considered the first stock exchange. Then stock exchanges arose at the end of the 18th century in Great Britain, the United States and Germany, and in 1878 in Japan. The first stock department as part of the St. Petersburg Stock Exchange was created in 1900, but there were no special stock exchanges in pre-revolutionary Russia. During the NEP period, exchanges played a prominent role, but by the 30s. their activities were discontinued.
Exchanges are divided into commodity exchanges (wholesale transactions in grain, metals, oil and other so-called exchange commodities), currency exchanges and stock exchanges (transactions in securities). From the end of the 19th - beginning of the 20th century. stock exchanges have become the most important centers of national and international economic life.
Exchanges were created as private, public or government organizations. In Russia, in accordance with current legislation, stock exchanges are created as commercial partnerships.
Currently, there are about 200 stock exchanges operating in the world. Each of them has its own characteristics, often significant. Even in Western Europe, despite attempts to form a single securities market, significant differences remain in the rules of stock exchanges.
The largest are those national stock exchanges that are located in the main financial center of the country. They concentrate shares of companies with nationwide operations. Provincial exchanges are gradually losing their positions. This is how a monocentric exchange system develops. In its most complete form, it is presented in England, where the London Stock Exchange is called the International Stock Exchange, since it incorporates all the exchanges not only of Great Britain, but also of Ireland. The exchange systems of Japan and France are also monocentric, but provincial exchanges still exist there, but their role is very insignificant. A similar system has developed in Russia, where the main stock exchanges are concentrated in Moscow.
In a number of countries, there is a polycentric stock exchange system, in which several stock trading centers occupy approximately equal positions. This happened in Canada, where the Montreal and Toronto exchanges are leading, and in Australia, where the Sydney and Melbourne exchanges are leading.
The US stock market is specific in this regard: it is so vast that there is room for a generally recognized leader - the New York Stock Exchange, and another large exchange - the American Stock Exchange; In addition, there are a number of large provincial exchanges operating in the country. Their number has decreased in the post-war years, but those who remain are standing quite firmly on their feet. Therefore, the US exchange system should be classified as built according to a mixed type.

Exchange members and participants

The activities of the exchange are strictly regulated by government documents and the charter of the exchange. The charter first of all defines possible members of the exchange, the conditions for their admission, the procedure for the formation and management of the exchange. In Russia, any professional securities market participants can be members of the stock exchange. Thus, intermediaries reign on the stock exchange.
The Russian Stock Exchange organizes trading only between exchange members. Other participants in the securities market can carry out transactions on the exchange exclusively through the intermediary of exchange members. Stock departments of commodity and currency exchanges in accordance with the Federal Law “On the Securities Market” are also recognized as stock exchanges. According to Russian legislation, the following is not allowed: unequal status of members of the stock exchange, temporary membership, as well as leasing of places and their pledge to persons who are not members of this stock exchange.
The range of securities with which transactions are carried out on the stock exchange is limited. To be included in the number of companies whose securities are admitted to exchange trading (in other words, for the company’s shares to be accepted for quotation), the company must satisfy the requirements developed by the exchange members regarding sales volumes, the amount of profit received, the number of shareholders, the market value of shares, frequency and nature of reporting, etc. Members of the exchange or the government body that controls their activities establish the rules for conducting exchange operations and the regime governing admission to quotation. The procedure for including shares on the stock exchange quotation list is called list.
The number of joint stock companies is measured in tens and hundreds of thousands (in the USA - several millions), and on the stock exchanges the number of listed companies is in the hundreds, or at best in the thousands. Thus, the shares of approximately 2,800 companies are represented on the London Stock Exchange, and about 1,700 on the New York Stock Exchange. These are the largest and most famous joint stock companies in the country.
In Russia, the inclusion of regional trading exchange platforms in the trading system of the Moscow Interbank Currency Exchange (the largest stock exchange in the country) is the first step towards the formation of a unified all-Russian securities market. In turn, the infrastructure base created in the regions with the help of a trading network for government securities opens up the prospect of introducing a high-tech trading system for non-state stock instruments. Until now, regional isolation, along with underdeveloped infrastructure, are a serious obstacle to the mobilization of relatively free funds.
Partnerships, limited liability companies and closed joint stock companies should be excluded from potential candidates for stock exchange listings, since their deposits and shares cannot be traded on the market.
As for open joint stock companies, they differ in the scale of their activities. For large and rapidly growing companies, attracting attention to their shares is not difficult, while for others it is a difficult task. Therefore, from the point of view of the intensity of share circulation, joint stock companies are stratified. For some securities, supply and demand are so great that transactions are concluded not just every day, but many times a day, while for others - once every few weeks or months. Hence the conclusion: in the first case, quotation on the stock exchange is advisable, in the second - not. After all, you have to pay for a quote, but why pay if there are few transactions.

OTC market

It is clear that the existence of an over-the-counter securities market is necessary. It presents many reputable companies, whose size does not reach exchange standards (primarily in terms of the number of shares issued and the degree of their reliability). The over-the-counter market is also an “incubator” where companies are grown and their shares are eventually transferred to the exchange.
The backbone of the over-the-counter market is a computerized communications network that transmits information about billions of listed shares. At least some of these securities are characterized by a higher level of speculativeness. Therefore, many “players” prefer the over-the-counter market. Information about the prices prevailing on it during the day and the volumes of transactions completed is regularly published along with data on exchange turnover.
Unlike an exchange, the over-the-counter market is not localized and represents an interconnected network of firms conducting transactions with securities. The size of over-the-counter markets varies significantly depending on the countries in which they operate. For example, in the United States, in terms of value, the volume of transactions is almost equal to the turnover of the central New York Stock Exchange; in Japan it constitutes only a small fraction of exchange turnover. In Russia, the main turnover of securities occurs in the over-the-counter market.
The main feature of the over-the-counter market is the pricing system. A company that deals with securities over-the-counter operates in the following way: it buys them with its own funds and then resells them. The client is not charged a commission, as on the stock exchange, but the securities are sold to him at a premium to the price at which they were purchased by the firm, or purchased at a discount to the price at which they will later be resold. This markup or discount forms the profit of the intermediary company.
The main sale of government bonds and shares of small firms not included in the exchange lists takes place through the over-the-counter market. Over-the-counter trading of securities is carried out through personal and telephone contacts, as well as through the electronic over-the-counter market, which includes special computer telecommunication systems.
The exchange mechanism, developed back in the Middle Ages, is less flexible compared to the over-the-counter mechanism. Of course, technological advances are leading to the development of over-the-counter trading systems that are cheaper, more flexible and more efficient. But their main characteristics - information transparency, guarantee and reliability - are inferior to exchange ones. It is these qualities that create certain advantages for exchange trading at the stage of formation of the stock market.

Models of the stock exchange and the over-the-counter market

What are the other differences between the Anglo-American stock market model and the Western European one? Their essence can be schematically depicted as follows: in one model, controlling stakes are usually small and therefore the bulk of them are freely traded on the market; in another model, the overwhelming share of shares is in controlling stakes and, therefore, relatively few shares are traded on the market. The first model can be designated as Anglo-American, the second as Western European (continental).
Despite the conventionality of such a scheme, the differences between the models reflect the essence of what is happening in real life. In the Anglo-American model, there are many shares on the stock exchange and over-the-counter market, which means there is a high probability of having a large number of investors willing to buy and sell them. Consequently, it is possible to form a block of shares and seize control of the company. In the Western European model, this possibility is less likely. The transfer of a company from hand to hand can only occur at the request of the previous owners. Share turnover on the stock exchange and over-the-counter market is low.

Russian stock market

The Russian securities market belongs to the developing markets. The total capitalization of the Russian stock market in 1998 reached $50 billion. Average daily trading turnover in dollar terms until August 17 1998 was about $100 million. In terms of growth rates of these indicators, the Russian stock market was the leader among emerging markets. At the same time, less than 1% of extra-budgetary investments were financed through the issue of corporate securities, compared to 10-40% in countries with developed economies. Therefore, it is too early to talk about any formed model of the Russian securities market.
In Russia, the development of the stock market took place in two directions: the creation, firstly, of stock exchanges themselves and, secondly, a universal over-the-counter market for various financial instruments and currencies, which also provided participants with a full range of services - from organizing trading to clearing and settlements as both in securities and in cash.
An example of the first direction is the Moscow Interbank Currency Exchange (MICEX), the second is the Russian Trading System (RTS). Today, differences remain in the financial instruments traded. If RTS continues to be the organizer of trading in shares, then previously specialized exchanges for trading shares and bonds (for example, the Moscow Stock Exchange) are trying to form a currency market and a derivatives market. The pioneers of universal stock exchanges are the MICEX and the St. Petersburg Currency Exchange (SPEX), which since 1997 have been organizing trading in almost all types of financial instruments and currencies. In general, the trend towards universalization of the stock market in Russia can be traced.
In the short and turbulent history of the development of the Russian stock market, almost every year is unique and distinguished by special events. Among them are the launch of the government securities market (1993), the admission of non-residents to the Russian government securities market (1996). Beginning in October 1997, the stock market entered the most difficult stage in its history. The growing instability of the Russian financial (including stock) market from that moment on ended in August 1998 with a sharp aggravation of the situation, affecting all segments of the market. The scale of the turmoil that befell the market, combined with the destabilization of the banking system, gives reason to characterize the current situation as a systemic crisis.
In order to partially overcome market uncertainty, restore market guidelines, maintain a functioning market infrastructure and offer commercial banks participating in the government securities market an alternative instrument for regulating liquidity, the Bank of Russia issued its own short-term zero-coupon bonds (OBR) from September 2, 1998. Unlike GKOs and OFZs, Bank of Russia bonds are not an instrument for budget financing. In general, the experience of issuing OBRs can be assessed as positive: they ensured the continuity of trading in securities on the stock market, although they could not become a financial instrument that would divert significant amounts of ruble funds from investments in foreign currency. Since mid-February 1999, there has been an increase in activity in the corporate securities market: trading volumes have increased noticeably, the stock price has risen to the level at the end of August 1998, and a qualitative change in the market structure is taking place. A distinctive feature of the new GKO-OFZ market is the longer-term nature of bond debt, which is explained by the dominant share of OFZ issues with long maturities in the total volume of OFZ issues traded on the bond market.

5. Types of transactions on the securities market

When classifying transactions with securities, one can proceed from several criteria. The most important is the division into cash and urgent transactions. There are also arbitrage transactions based on the resale of securities on various exchanges when there is a difference in their rates, and package transactions, which are transactions for the purchase and sale of large quantities of securities.

Cash and urgent transactions

Typical for cash transaction is that its implementation mainly occurs immediately after the conclusion of the transaction. In Germany, for example, the transaction must be completed no later than the second business day after the transaction is concluded. In the USA, there are differentiated terms for completing cash transactions - from immediate payment to five days. A similar principle applies in the UK. In Japan, depending on the contract, cash transactions can be completed from one to 14 days; in Switzerland they take up to five days to complete. In Russia, such transactions are carried out, as a rule, within two to three days.
It should be noted that the securities themselves are not physically involved in transactions, because, as a rule, they are stored in special bank accounts. In order to transfer the sold securities from the bank to the buyer, their owner issues a special check for the securities. After the introduction of complex computer systems for exchange settlements, the need to issue checks for securities disappeared and all transfers are carried out using a computer.
Urgent operations are, in essence, supply contracts, by virtue of which one party undertakes to deliver a certain amount of stock assets within a specified period, and the other - to immediately accept them and pay a predetermined amount. Futures transactions are usually concluded for a period of one to three months, rarely - for six months. Such operations are not permitted in all countries. Thus, in Germany in 1931, due to the global economic crisis, they were prohibited and only since 1970, forward transactions with stock values were again allowed in a modified form and with certain restrictions. According to Russian law, the execution of a transaction and its payment can be separated by no more than 90 days. Futures transactions are widely practiced in the USA and Switzerland.
Futures transactions are represented, first of all, by simple forward transactions, futures and options. Financial futures are a standard transaction that is concluded according to the rules established by the exchange, when the partner in each transaction is itself exchange represented by its clearing (settlement) chamber. The futures market has greater liquidity, since standard rules provide the opportunity for free trading for any number of participants.
If a condition is added to a futures contract such as the right to choose for a certain remuneration (premium) to buy (sell) a security at a price pre-agreed in the contract or to refuse the transaction, then this additional parameter turns the forward transaction into an option.”

From English option - choice.

Thus, the considered transactions perform a hedging function, i.e. limiting risks when conducting various exchange operations.
As a rule, urgent transactions with stock values are clearly speculative in nature. Stock speculators who play short (the so-called bears) conclude essentially fictitious sales (called short sales in the stock market lexicon) by a set date. They sell securities that they do not yet own at the time the transaction is concluded (in other words, they speculate on a fall in the exchange rate). Bull traders (called bulls) make purchases of securities for a period of time in anticipation of an increase in the price (referred to as long transactions).

"The names “bulls” and “bears” are interpreted as follows: those who play for the increase are like bulls who seek to “raise their horns”; those who play for the fall are bears who “crush under themselves.”

The transaction must be completed, as a rule, by the end of the month.
The Bears hope that shortly before the trade deadline, i.e. at the end of the month, they will be able to buy securities at a lower rate and sell them at a higher price established in the forward transaction agreement, and thus receive the exchange rate difference. Bulls, on the other hand, assume that they will subsequently be able to sell securities at a higher rate. To do this, they purchase securities at the rate established in the transaction.

Purchase and sale of securities

In a simplified form, the purchase and sale of securities is as follows. The investor (buyer) instructs the broker to buy 100 shares of company X at the rate of 150 rubles. for one share. The seller instructs his broker to sell the same batch of similar shares at the same rate. Brokers turn to a specialist dealer, who forms a package of applications for company X. Seeing that the offers he received are mutually satisfactory and no other offers are received, the dealer sets the official stock price at 150 rubles. and notifies both clients that the transaction has been completed.
In reality, the dealer receives a much larger number of orders to buy and sell the same securities with requests for quite a variety of rates. Its purpose is to determine the rate at which most requests can be satisfied and the difference between supply and demand. It is this information that he announces on the exchange floor in search of missing securities or in order to sell their surplus. The main goal of the dealer is to balance supply and demand and sell all lots of securities. Since information about supply and demand is constantly received, the price of securities also undergoes certain changes during the day. Therefore, the exchange lists record the rates at the time the exchange opens and at the time its operation ceases.
If the transaction is completed, then stock fees are deducted from the sale price of stock assets, including fees (remuneration) for intermediaries, exchange tax and sometimes some other payments.
The commission fee is not the only source of income for the intermediary. The other source goes back to speculation, which is understandable. A stock exchange, where neither sellers nor buyers see each other, where thousands of transactions can be made within a few hours, cannot but be a place of speculative, i.e. calculated for purely operating income activities.
Speculation on the stock exchange is carried out, first of all, by the companies themselves, sometimes releasing “fake” stock values into circulation or engaging in so-called crossing – repeated purchase and sale of their own securities to create the illusion of great demand for them.
On the stock exchange, as noted above, brokers, brokers and, in general, any investors who try to predict the dynamics of exchange rates in forward (futures) transactions also speculate.

State regulation of operations on the securities market

In the context of weakening state intervention in economic life, observed in most countries, the abandonment of state regulation of securities has not happened anywhere. This would not only be undesirable, but even unrealistic. One can see the objective process of expansion of money capital, the growth of exchange activity, which significantly exceeds the increase in the turnover of real capital, and, accordingly, exchange speculation, the real danger of exchange crashes with all possible economic and social consequences. All these problems still remain acute today and do not allow us to abandon the created system of state regulation.
There is also a process of qualitative changes in the stock market, which requires an adequate response from regulatory authorities. These changes occur in two directions. First of all, the so-called globalization of the securities market is taking place, i.e. the formation of a global market, of which all national markets become parts. The current stage is characterized by the increasing overcoming of national boundaries of exchange operations, the simultaneous circulation on national markets of securities denominated in different currencies, the emergence of cosmopolitan securities such as Eurobonds, Euroshares and Euronotes. The expansion of the issue of securities of TNCs forces the regulatory authorities of all developed countries to monitor changes occurring in the laws of partner countries and to compare their laws and regulatory systems with them. And within the EU, there is an official process of creating a single legal space for the functioning of national securities markets of the member countries of this Union.
The second direction is the modification of instruments, forms of activity, as well as subjects of the securities market. The emergence of automated systems for trading securities, a mechanism for speculation, especially derivatives, which include options, futures, swaps, does not fit into the traditional understanding of the securities market.
In Russia, at the state level, a market regulation system is also being created and its functioning is ensured, the basis of which is the Federal Law “On the Securities Market” of April 22, 1996. At the same time, the regulatory system is developing towards greater detail and tightening state control over the activities of the securities market . The federal executive body for pursuing state policy in the field of the securities market, monitoring the activities of professional participants in this market, and ensuring the right to invest of shareholders and investors is the Federal Securities Market Commission.
In addition, the state itself, represented by the Ministry of Finance of the Russian Federation, is the largest borrower on the securities market and has a direct impact on its quantitative and qualitative characteristics. It is also the largest holder of securities of Russian enterprises and acts as the largest seller in the corporate securities market.

6. How to read stock indices, quotes and ratings

As Russian and foreign practice shows, the actual picture of supply and demand can be distorted mainly by speculative operations. However, despite this, the stock exchange (more precisely, stock indices and quotes) remains a fairly accurate indicator of the state of affairs in the economy.

Stock indices

To assess the movement of stock prices on all exchanges, a stock price index is calculated. Typically, a country is dominated by one, or at most two, stock price indices, just as there is one dominant stock exchange. Exchange rate index each share (bond) is determined as the product of its price by the number of shares of this type listed on the stock exchange, divided by the par value of the share. Subsequently, share price indices are used to calculate the aggregated stock exchange index. The most common among them is the Dow Jones Index (Dow Jones, DJ) of the New York Stock Exchange. Based on its model, the indices of all other exchanges are calculated. The Dow Jones Index has been published since 1884 by Dow Jones & Co. Inc., publisher of the Wall Street Journal and Barron's; it is calculated as an index arithmetic average exchange price (rate) of shares of leading American companies.
The Dow Jones Index is calculated: a) for shares of the 30 leading US industrial corporations that have the greatest prestige from the point of view of investors (Dow Jones Industrial Average, DJIA), among them - General Motors, General Electric ), "Texaco" (Texaso), etc.; b) for shares of 20 leading transport companies; c) for shares of 15 leading utility companies.
The most important is the industrial index. The total indicator (composite) of the Dow Jones index is determined for all of these 65 companies. If a company whose shares are included in the index is acquired or merged with another, its shares are removed from the index and replaced with shares of the new large corporation. A list of these companies is published daily by the Wall Street Journal.
It should be noted that the Dow Jones Industrial Average is only meaningful when regular comparisons between current and historical values can be made. For example, an index value of 10,870.5 is compared with its value of 10,871.71 the day before. The difference between daily values is measured in points. Thus, the difference in index values is 1.21 (10,870.5 - 10,871.71) indicates a drop in stock prices by 1.21 points.
The importance of the Dow Jones Industrial Average extends far beyond the United States. Since the New York Stock Exchange concentrates about 50% of the total exchange turnover of developed countries (the total value of shares listed on it is estimated at several trillion dollars), the movement of the index in question serves as an important signal in the financial and economic affairs of countries with market economies. Taking this into account, it is calculated on the exchanges and officially announced every half hour.
However, the Dow Jones index has serious competitors. Thus, the largest securities market research firm in the United States, Standard and Poor's 500 Index, S&P 500, has been calculating an index of the weighted average price of shares of 500 leading American companies since 1957. This index is more representative because it covers 400 industrial, 20 transport enterprises, 40 utilities and 40 financial companies. Separate (independent) indices for these groups of industries are also calculated. But the weighted average stock price index has a drawback: its numerical value is many times smaller than the value of the Dow Jones index. Let's say when the Dow Jones index is 2965.56, the Standard & Poor's index is only 377.75. Therefore, market fluctuations measured by the latter indicator are not as noticeable.
In turn, the American automated quotation system of the National Association of Stock Dealers (NASDAQ) has a large share of shares of companies in the high technology sector, which determines a number of psychological characteristics of investors and players in this market. For example, there is a great temptation to play to increase the shares of rapidly growing companies, to “catch a rising star.” As a result, the shares of some companies are greatly overvalued.
In addition to these basic indicators, each of the exchanges and the over-the-counter market calculates its own indicators to characterize the dynamics of share prices of companies registered on them. The New York Stock Exchange introduced such a measure in 1966. The American Stock Exchange followed suit in 1973, introducing a similar measure for its 800 listed companies.
A similar principle is used to build a system of stock indexes in all countries with a developed securities market. Thus, the Japanese analogue of the Dow Jones index is the Nikkei index, calculated on the shares of 225 largest companies, the Tokyo Stock Exchange Index Topix; German - DAX index (DAX) for 30 companies; Singaporean - the Straits Times index, Hong Kong - the Hang Seng index, etc. Some newspapers and news agencies calculate their indices using the Standard & Poor's method for registered companies. For example, in the UK the index is calculated by the Reuters agency (Reuter) and the Financial Times newspaper (FT - SE Index), in Germany - by the Frankfurter Albgemeine Zeitung (FAZ - Index).

Stock quotes in Russia and abroad

Among the numerous reports characterizing the current state of the securities market, information on stock exchange quotations is of greatest interest to investors. This is quite understandable, since, firstly, the share was and remains one of the most common and popular types of securities among individual investors and, secondly, it is within the framework of exchange turnover that the securities of companies that determine the business entity of any country are traded.
At first glance, stock market reports are intimidating with their volume, abundance of numbers and abbreviations. However, reading them is not difficult. Most investors draw from them all the basic information about the state of the enterprises they are interested in and the situation on the securities market. Moreover, to understand these columns of numbers you don’t even need knowledge of foreign languages, since everywhere they are built according to a more or less uniform pattern.”

"Exchange quotation of shares on US stock exchanges is discussed in the first edition of this textbook (Economics: Textbook / Edited by A.S. Bulatov. M., 1994. P. 384-386),

In the 90s in Russia there were a number of stock indices, calculated, as a rule, by Russian information and brokerage companies (Table 24.2).

Table 24.2. The main indices of the Russian stock market used in the 90s.

Currently, the official indicator of the state of the Russian securities market, which allows monitoring the current situation on it, is the RTS-Interfax index.
The RTS-Interfax index (currency value) is calculated as the ratio of the current total market capitalization (value) of securities securities included in the list for calculating the index, to the total market capitalization (value) of securities at the base point in time according to the following formula:

where Iо is the initial value of the RTS-Interfax index at the base point in time (January 5, 1998); In — RTS-Interfax index (currency value) at the current time (n= 1,2,3, ...); K—smoothing coefficient, which is introduced as a result of changes in the list of shares included in the calculation of the index (initially K = 1); MktCapn — total market capitalization of securities from the listing to calculate the index at the current time; MktCap0 is the total market capitalization of securities included in the list for calculating the index at the base point in time.

TOTAL MARKET CAPITALISATION OF SECURITIES OF THE Russian Trading System (RTS) is defined as the product market price of shares of this type at time n by the number of such shares:

where MktCapn is the total market capitalization of securities; Pni is the market price of the i-th type share at the current time; Q ni is the total number of shares of the i-th type issued at the current time; N is the number of shares in the list on which the index is calculated.
In table Table 24.3 shows the indicators of the corporate securities market for specific dates.

Table 24.3. Selected indicators of the corporate securities market G

The RTS-Interfax index (ruble value) is calculated on the basis of the currency value, taking into account changes in the current ruble exchange rate to the US dollar compared to the rate on the starting date:

where Im is the RTS-Interfax index (ruble value); In — RTS-INterfax index (currency value); R is the ruble to US dollar exchange rate on the day of index calculation; Ro is the ruble to US dollar exchange rate on the initial date of index calculation.

As noted above, the bulk of securities trading in Russia currently occurs on the over-the-counter market. This is largely due to the privatization scheme. The foundations of the over-the-counter market were laid in 1993-1994. Trading systems, along with increasing volumes of activity, strive to solve the problems of standardizing the terms of transactions, stock quotes, the obligation of brokers to fulfill the conditions specified in the application, liability for violation of trading rules, ensuring the re-registration of property rights, compliance with deadlines for re-registration and payment, maintaining market liquidity, etc. Taking into account All of this, in December 1996, on the basis of the Russian Trading System (RTS), RTS-2 was opened for second-tier shares. RTS focuses on the most liquid stocks. There are about 20 of them. RTS-2 serves approximately 1,500 more joint-stock companies, in particular, securities of regional enterprises in the energy complex, communications, metallurgy, etc. Thus, trading in less liquid and more liquid shares is divided.

Bond ratings

Almost all bonds issued are rated by one or more specialized rating agencies. The main goal is to determine the issuer's ability to pay interest on time over the life of the bond and repay it on time. In other words, you need to determine the reliability indicator. This is what commercial agencies do.
The assessment systems of two main rating agencies are most famous in the world: Standard & Poor's Corporation and Moody's Investors Service.
Their assessments most often coincide.
The initiative to determine the rating of a security usually belongs to the issuer, who pays the agency a certain amount for assessing its creditworthiness.
If a bond is not graded and rated, it will not be purchased by individual investors, and institutional investors are not legally permitted to make such purchases.
All rating agencies use a letter system for designating degrees p and s k a. The highest level of reliability is indicated by the letters AAA, the lowest - D (Table 24.4). "Halftones" are characterized by the signs "+" and "-".
The rating of the first four levels characterizes the so-called investment grade securities, the next group - speculative securities and the last, third, refers to completely insolvent issuers.

Financial globalization

Active globalization is one of the features of the post-war development of financial markets around the world. All of them operate in ever closer connection with each other, turning into a single financial market. In other words, financial globalization is a higher stage of internationalization of the activities of financial markets in all its forms in order to meet the needs of the development of monetary and financial relations.
This is largely manifested in the deep interaction of all the largest stock exchanges in the world. Fluctuations in the prices of shares and other financial assets on the exchanges of some countries are inevitably reflected through the exchange mechanism on the market conditions of other countries.
Almost complete abolition of restrictions on the movement of capital in the 70s. in developed countries has led to the fact that the securities market has become global in the full sense of the word. International securities and, above all, Eurobonds appeared in circulation, which became the main object of transactions on the world stock market.
Eurobond is a long-term security that is issued on the Eurocurrency market by corporations, governments, and international organizations in order to obtain funds to replenish working and fixed capital. Eurobonds are issued for various periods (from 7 to 40 years). Investment and commercial banks place Eurobonds. The main buyers are insurance, investment companies and pension funds.
The process of financial globalization has accelerated due to the further development and improvement of information systems. Comprehensive computerization, the creation of reliable and accessible telephone and other networks interconnected by space data transmission channels allow the three largest stock exchanges in the world - New York, Tokyo and London - to have a permanent satellite communication system between them. Information is transmitted continuously and displayed on stock monitors. In the field of transferring financial information, two largest agencies compete: the British Reuters (has 173,000 terminals scattered around the world) and the American Telerate (76,000 terminals). Telerate dominates the US market, Reuters dominates the rest of the planet.
Since 1996, the sale of shares using an international telecommunications network has been introduced. Each client with a personal computer can connect to the Internet system, which includes stock quotes of companies listed on the London Stock Exchange, and send orders for the purchase and sale of certain securities.
The internationalization of world markets and the increase in the share of foreign securities in the portfolios of large investors have led to the need to establish indices that reflect general dynamics, with a single calculation base - the so-called global indices. The most reputable and widely used indices of this kind include the FT-SE Actuaries World Indexes and the Morgan Stanley Capital International indices. Calculations are carried out on 2212 shares of 24 countries (FT-SE). These stocks account for at least 70% of capitalization in each of these countries. The basis of 100 is taken on December 31, 1986. The index is calculated after the close of the New York Stock Exchange and published the next day in the Financial Times.
Morgan Stanley indices include 3 international, 19 country and 38 international sector indexes. The calculation takes into account data from 1,375 companies listed on stock exchanges in 19 countries, which account for 60% of the total capitalization in these countries.
Since January 1993, the Wall Street Journal has published the Dow Jones World Index, calculated based on the shares of 2,200 companies in 13 countries, broken down into 120 industry groups.
Changes in financial markets, which accelerated throughout the 1990s, define the contours of the financial market of the 21st century.
The global financial market is increasingly taking on the shape of a two-tier system. The first - the upper, supranational, or global level is represented by the circulation of securities of leading transnational corporations. The second is the lower, national level. At this level, securities of national companies are traded. In the context of globalization, the boundaries between the two levels of the financial market are blurred.
How the model of the future global financial market is being formed can be seen from the ongoing changes in the stock market in Western Europe in connection with the introduction of a single European currency - the euro. The consolidation and integration of the national stock markets of these countries creates conditions for the formation of a common Western European financial space, within which the securities of about 300 largest Western European enterprises will be traded. Along with the emerging pan-European financial market, national markets also retain their importance.

conclusions

1. The financial market (loan capital market) is a mechanism for the redistribution of financial resources between lenders and borrowers with the help of intermediaries based on the demand and supply of funds. In practice, this is a set of credit organizations (financial credit institutions). The main function of this market is the transformation of idle funds into loan capital.
2. The loan capital market is divided into the money market and the capital market. The money market refers to the market for short-term credit transactions (up to one year). In turn, the money market is usually divided into accounting, interbank and foreign exchange markets, as well as the derivatives market. The capital market includes the securities market and the market for medium- and long-term bank loans.
3. The financial market is also divided into the primary market (where financial resources are mobilized) and the secondary market (where these resources are redistributed), into national and international financial markets.
4. Securities traded on the financial market include fixed and non-fixed income securities, state, municipal and corporate securities. There are also mixed forms.
5. Stock securities are those securities that are admitted for transactions on the stock exchange. The latter is regularly functioning and organized. In a certain way, part of the securities market (stocks, bonds, treasury notes, bills, certificates), where purchase and sale transactions are made with these securities through the mediation of exchange members.
6. Members of the exchange are individuals and legal entities. There is also an over-the-counter securities market, where companies are represented whose sizes do not yet reach exchange standards. Operations on the securities market are divided into cash and urgent.
7. To assess the conditions of the securities market, stock indices are calculated and tables of stock exchange quotations are compiled, and bond ratings are carried out.
8. Financial globalization is a higher stage of internationalization of the activities of financial markets in all its forms in order to meet the needs of the development of monetary and financial relations.

Terms and concepts

Financial market (loan capital market)
Money market
Capital market
Accounting market
Derivatives market
Interbank market
Currency market
Stocks and bods market
Stock
Fixed Income Securities
Dizagio
Agio
Earnings per share (bond)
Dividend
Stock Exchange
Stock values
Dealer
Broker
Cash transactions
Urgent operations
Stock quote
Stock indices
Bond ratings
Eurobond
Financial globalization

Self-test questions

1. The components of which market are the securities market and the market for medium- and long-term bank loans?
2. What is the difference between a bond and a stock?
3. Calculate what annual income will be received on a bond for which annual interest payments are set at 8%, if at a nominal rate of 100 rubles. it sells for 90 rubles.
4. Determine the income of the owner of a bond with a payment of 8% per annum after the established 10 years of its operation, if the bond is redeemed at a nominal rate of 100 rubles, and was purchased for 90 rubles.
5. Let's say that five years ago you purchased a bond with a par value of 100 rubles, issued for a period of 10 years. Annual interest payments on it are 4% (about the same was the interest paid by banks on deposits). Currently, most banks accept deposits at 10%. You have decided to sell this bond. At what price and at what discount can it be sold in today's conditions?
6. Calculate how much income the owner of a share will receive if its par value is 250 rubles, the acquisition price is 1000 rubles, and the dividend is 100 rubles.
7. A joint stock company issued 1000 ordinary shares with a par value of 1000 rubles. During the year of operation, a profit of 2 thousand rubles was received, 50% of which was distributed as a dividend, and the other 50% went to expand production. Determine the book price of the stock.
8. Explain what securities and by what criteria are admitted to the stock exchange.
9. Explain the differences between cash and futures transactions in the Securities market. Why are urgent transactions on the stock exchange legally prohibited in a number of countries?
10. Describe the participants in urgent operations - “bulls” and “bears”. How do their activities on the stock exchange differ?
11. What stock indices calculated in Russia do you know?

Plan

Introduction…………………………………………………………….

1. General characteristics of the capital market………………………….

2. Interest, as the price of using capital……………………..

3. Discounting……………………………………………………………..

Workshop……………………………………………………….

Conclusion………………………………………………………...

List of references……………………………..

Introduction

In market conditions, the capital market is very important, as it is an important source of long-term financial resources. The capital market includes the securities market and the banking market, which contributes to the solvency of the financial system.

The most important function of the financial market is the transformation of free funds into loan capital, then redistribution among various economic entities that have one goal - increasing capital.

The relevance of this topic lies in the fact that currently there has been increased interest in the capital market from one side or another.

The purpose of the course work is to study and reveal the features of the capital market. Based on the goal, the following tasks need to be solved: to reveal the essence of capital and interest, as the price of using capital.

General characteristics of the capital market

Capital market(capital market) - part of the financial market on which long-term money circulates, that is, money with a circulation period of more than a year. In the capital market, free capital is redistributed and invested in various profitable financial assets.

The capital market is a part of the financial market where supply and demand for medium- and long-term borrowed capital is formed.

There is a demand for capital companies And population. At the same time, their motives for behavior are somewhat different, but as a result they behave in a similar way: when the interest rate decreases, firms and consumers increase the demand for loans.

Fig.1 Demand curve

That's why the market demand curve for capital has a negative slope(Fig. 1), like any demand curve for a good or resource. Let's look at how this follows from the behavior of firms and consumers.

1. Firms show demand for capital in order to use it to purchase capital goods (equipment, materials, etc.) and make a profit. They resort to the services of borrowed capital when they do not have enough of their own money (for example, the demand for their product has increased and firms want to expand production). Moreover, the cheaper a loan costs a company, the more money it will want to borrow.

For example, a retail company at a low interest rate will decide to take out a loan and build three new stores, at a higher interest rate it will decide to build only two stores, at an even higher interest rate it will decide to build only one, and at a certain interest rate it will refuse to expand production altogether. .

2. Consumers borrow money not to make a profit, but to purchase some consumer goods. They do this in several cases.

First, they can borrow money to ensure current consumption in case of an unexpected decrease in income. In this case, money is needed to purchase essential goods and, strictly speaking, is not capital. Such loans can exist in conditions of uncertainty in obtaining income - for example, in the event of a crop failure for farmers.

Secondly, consumers can take out loans for the purchase of capital consumer goods, which have a relatively high price and require saving money from income over a long period of time.

Let's assume that a consumer wants to buy a piano that costs 10,000 rubles. In order to collect the required amount, the consumer needs to save 1000 rubles for ten years. The consumer may not wait ten years, but borrow 10,000 rubles and buy a piano outright, and then repay the debt with interest over ten years. In this case, he will immediately begin to receive utility from the piano, but the piano will cost him more. The amount of interest he pays will be a payment for the opportunity to get the piano faster.

Any consumer at a given interest rate will make his choice, which is determined by several factors. Firstly, preferences consumer - a more impatient consumer who wants to start playing the piano quickly will be more likely to be willing to pay the required amount in the form of interest in order to start consuming this good immediately. Secondly, degree of certainty of the future- if the consumer does not know his future income well, he may hesitate to borrow, as he may have problems repaying the debt. Third, amount of income consumer - the poorer the consumer, the sooner he will decide to wait and not pay additional money for the approaching start of consumption.

Changing the interest rate changes the choice of consumers - the lower the interest rate, the more consumers decide to borrow money and buy the good right away, rather than “endure” until they accumulate the required amount themselves.

Thus, When the interest rate decreases, the demand for capital increases as both firms and households decide to borrow more money.

The capital supply curve has a positive slope(Fig. 2), which is also determined by the behavior of consumers and firms.

Rice. 2 Supply curve

1. Firms act as creditors if they have temporary “extra” money that they cannot use profitably themselves. What are the reasons for the appearance of “extra” money?

One of the reasons for an individual company to have temporarily free cash may be the need to save part of its profits in the form of depreciation charges, intended to cover the costs of a capital good.

Thirdly, it provides loans to government agencies and the population to solve such important tasks as covering the budget deficit, financing part of housing construction, and the like.

Forms of turnover of funds (financial resources) in the capital market:

The credit market allows for the accumulation, movement, distribution and redistribution of borrowed capital between spheres of the economy. The credit market is a mechanism through which relationships are established between enterprises and citizens who need funds, and organizations and citizens who can provide (lend) them under certain conditions.

At the same time, the credit market is a synthesis of markets for different means of payment. In countries with developed market economies, credit agreements are mediated, firstly, by credit institutions (commercial banks or other institutions) that borrow and provide loans, and, secondly, by investment or similar organizations that ensure the issuance and movement of various debt obligations that are realized on a special securities market.

The functioning of the capital market allows enterprises to solve problems of both the formation of investment resources for the implementation of real investment projects, and effective financial investment (implementation of long-term financial investments). Financial assets that circulate on the capital market tend to be less liquid; They are characterized by the highest level of financial risk and, accordingly, the highest level of profit.

It should be noted that this traditional division of financial markets into the money market and the capital market in modern conditions of their functioning is conditional. This convention is determined by the fact that modern market financial technologies and the conditions for issuing many financial instruments provide a relatively simple and quick way to transform individual short-term financial assets into long-term ones and vice versa.

Characterizing certain types of financial markets based on both of the above-mentioned characteristics, it should be noted that these types of markets are closely interconnected and operate in the same market space. Yes, all types of markets that serve the circulation of financial assets (instruments, services) of different types are simultaneously an integral part of both the money market and the capital market.

Capital as a factor of production expresses the totality of production resources created by people in order to use them to produce future economic goods for the sake of making a profit. Capital includes: buildings, structures, equipment, tools, technologies, developments, materials, raw materials, semi-finished products.

Different elements of capital participate in the production process in different ways. It is important to note that one component of capital is used once and is completely consumed during each cycle of production. The other part functions for several years and is gradually consumed over a number of production cycles. The first part of capital is called negotiable capital, and the second - main

To working capital- raw materials, materials, fuel, energy, semi-finished products, etc.

The working capital market will be a typical resource market. The principles of its organization and the mechanism for establishing equilibrium on it have much in common with the labor market. Maximization of profit in the working capital market is achieved at the point of equality of the marginal product in monetary form and the marginal costs of the operating material resource. In other words, when an enterprise optimizes the demand for working capital, the rule MRP = MRC applies.

Do not forget that an important feature of working capital is that its elements are transformed into cash. Why is working capital called working capital.

The creation of any value involves the use fixed capital. The organization of new production is impossible without investment in structures, buildings, and equipment. The operation of an enterprise also requires costs for updating and restoring existing fixed capital.

Since fixed capital is involved in economic activity for several years, the time factor becomes particularly important in the functioning of the fixed capital market.